Is there such a thing as green value in commercial property?

During the last 18 months several well-recognised property and sustainability industry experts have indicated that that there is no one defined ‘green value’ premium reflecting higher levels of sustainable performance features within an asset that can be automatically added to the value of commercial properties.

However the acknowledgement and incorporation of sustainable initiatives is a factor that is becoming increasingly important in the definition of what makes a ‘prime’ property, whether it be a new office development, a shopping centre or an industrial estate.

While it is very difficult to define independently a stand-alone value that can be attributed to all sustainability or green measures at a property, it is definitely possible to enhance the value or rental rates of a given property through the application of green measures. Such measures could include taking steps to attain green building certificates, such as:

  • Building Research Establishment Environmental Assessment Method (BREEAM): Europe’s leading sustainability assessment method for properties, addressing a number of lifecycle stages such as new construction, refurbishment and in-use Leadership in Energy.
  • Environmental Design (LEED): another third-party verification for green buildings, with around 1.85 million sq ft being certified daily, LEED is particularly popular within the US market.
  • National Australian Built Environment Rating System (NABERS): a six-star national rating system that measures the environmental performance of Australian buildings, tenancies and homes.
  • SKA Rating: the Royal Institution of Chartered Surveyor’s tool used worldwide for grading sustainable fit-outs, awarding bronze, silver or gold status. 
  • ISO 14001: the most widely adopted environmental management standard worldwide which details key measures to achieve effective environmental management within business.

 

Global research carried out by The World Green Building Council in 2013 demonstrates the value of these measures. The data shows properties with green building accreditations, such as those listed above, see rental rates improve by 19.7 per cent when compared with properties without. A BREEAM in Use accreditation was achieved at 5 Aldermanbury Square, London EC2, where Savills completed this on behalf of owner Deka Immobilien. The property gained an internationally recognised standard. This rekindled new energy efficient initiatives, with over £58,000 of savings per annum being identified.   

What’s more, energy efficient properties, or those that use few resources, will have lower overall running costs and will, in turn, be more attractive to cost-conscious tenants looking to reduce overheads. An example of this is Kings Place (picture above), a multi-let office building in London N19 where Savills operates an ISO 14001 environmental management system. The processes in place have facilitated a five per cent reduction in total building electricity consumption in 2015 through an LED lighting upgrade, and a 10 per cent increase in waste recycling rates through a comprehensive review of waste services offered to tenants.

So although there may be no such thing as a defined ‘green value’, assets without such attributes will fall short of what’s become standard in a world where the bar for sustainability has been raised.

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